Dedicated to understanding how finance, science, and history influence the behaviors of people while trying to survive the day to day bullshit.

Friday, February 23, 2007

What the F*CK Went Wrong?

This will be my first post here at The Finance Dude and I couldn’t be more excited. No really, have you ever been so pissed off that you stop to tell yourself I'm going to do something about that? Usually, we just continue on with our lives and think about it again on the weekend when we're not "busy." I feel like I'm screaming inside myself every time I pick up a newspaper or turn on the television version of "news." I'm neither left nor right. I for one think we should overhaul the entire "democratic" system since we no longer get representation. I remember being taught (wait till we get to that) in school that we started the Revolutionary war against Great Britain’s taxation (who ironically call it the War of Insurrection) without representation. Too bad the American people don’t fight the same way today.

What happened to being represented in Congress? Oh that’s right most of you simply tuned out of the process or in my case, I’m late to the party. So now I’m forced to accept what cards I’ve been dealt and I for one want a new set, you know?! Since that’s not going to happen any time soon, I’ll settle for bitching in cyber space which ultimately is no more than talking to a brick wall, but I’m happier.

Most of us just deal with the day to day bullshit and attempt to survive. Few of us stop to think about large trends across an entire social structure or financial changes that threaten our future. For some strange reason (GOD?), I’ve got this natural motivation to understand finance and economics. I’m not gifted enough to understand it all, yet; but I’m motivated enough to read like a rabbit’s sex drive. I can’t help myself sometimes; it’s almost like I’m OCD at times. There is a problem though. I’ve discovered a rabbit hole of knowledge and it only leads to more understanding, which then leads to more disdain for our current paradigms.

To understand where I’m coming from, you’ve got to look at the method to the madness. I tend to examine something at one end or the other, micro or macro, and then drill it all the way to the other side. Basically everyone’s little contributions DO add up and they DO create change. Change can’t be stopped. If you disagree with that statement then perhaps you might enjoy leaving right now because it’s going to get worse before it gets better. This change can be good or bad, but the point is that is does do something. Time is completely independent in this unique problem. The choices that are made now wind up creating consequences generations from now. The cancerous problems that are addressed today only serve as appetizers to the ongoing buffet with no end in sight.

Science serves as the basis of information - period. It changes, adapts and finds new answers to old and new problems. Your ass that’s planted in that seat is because of Science first and foremost. At one point people believed Earth was the center of the universe and that belief remained until Science could prove that it was the Sun at the heart of the solar system. Science discovered electricity and we are limited by our ability to harness the energy and distribute it. Science has formed the bedrock, the corner stone of knowledge and it continues to marginally expand.

Science is only one part of our world we’re stuck with and another part is the history that has preceded all of us. The cumulative knowledge on this planet is impressive to say the least. It’s wide ranging and without restraint. You can learn how to kill whole towns with nuclear weapons. Have you ever stopped to understand that sad fact? Kind of fucking sucks if you ask me, but what can you do but block that out 99% of the time. Understanding history can better prepare you to cope with the future changes that will happen. Now I'm not going to say you can predict the future, but my fellow Missourian Samuel Clemens, best known as Mark Twain, said it best:“History doesn’t repeat itself, but it does rhyme.”Ultimately we are reliving the same bullshit over and over it’s just a different flavor of Kool Aid folks.

Lastly there is the finance that underpins the entire systems today. When I talk about history, this is the kind of thing I am attempting to point out. We are only removed from mercantilism by roughly three hundred years and capitalism has dominated for the remaining time. Economic systems are not any more permanent than Rome was prior to the “greatest civilization ever” collapsing. We feel the permanence now due to the forces that bind it together, namely today’s corporate states of America. There are far too many people that want capitalism to work, than to let it fail. I might not be here, but neither will capitalism at some point. Why do I say that? For capitalism to work, we need growth. There’s one LITTLE problem though, thermodynamics, specifically the first and second laws.

The first law roundly states that energy can not be created or destroyed only transferred. I’m simply stating this, but you can’t make or destroy energy; only use it and recycle in a closed system (Earth is a closed system, economically speaking). Second law states that entropy, or waste, increase over time to a maximum value. At some point there will be so much waste inside the capitalistic system that it seizes up. We are witnessing the greatest explosion of fiat paper money in the history of mankind! Fiat paper money is not tied to anything in reality folks, nothing real is behind the value of that piece of paper. Human beings are in charge of the ATM machine and it doesn’t have a limit at all! People are not rational, and for now I will leave it at that. How does science apply to Economics?

Simple – we are living on a planet that is not expanding in resources. There was only so much iron ore, minerals, and oil endowed upon the planet. For capitalism to function there must always be growth but it’s quite obvious there will come a point at which growing won’t be an option. Again I highly doubt I see this end, but it’s not sustainable and that’s the point. We will all witness the end of oil however, and if you have never touched on peak oil research, you should. If you don’t want to read it, don’t bitch about it not being real. There is not a single person I know who has reviewed the data and come to a different conclusion than we will face the collapse of oil production in our lifetimes. I’ll do you one better and say I think we’ve already peaked around Dec 05, but that’s anther post too. Today’s finance is mostly akin to a Ponzi scheme whereby the next sucker that comes in the door pays the last one. So long as there are more people to feed into this, the merry go round continues. Money makes the world go round and if you don’t believe that then answer me this…Who financed Hitler before/during World War II?

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Who am I?

I'm a young guy with no experience in the financial markets beyond academic research (aka going to college). I wont be graduating with honors because I worked my ass off full time while going to school full time. My interests are diverse and include a range of uncorrelated topics. I tend to dwell on the big picture and remain focused on preparing for financial ruin. In case you haven't figured it out, I tend to walk to a different beat.